In another victory for Ripple in the ongoing courtroom saga against the SEC, Judge Sarah Netburn has sided with the arguments of XRP’s legal team and will make a decisive decision on deliberative litigation on September 28.
Netburn’s decision came at the end of last night’s conference call, which was aimed at making progress and overturning an argument over Ripple’s request for “fair use” access to internal Securities Exchange Commission (SEC) documents.
In an in-person review, Judge Netburn will now conduct an on-camera examination of the internal documents herself without Ripple’s legal team to determine whether the SEC has crossed the line on deliberative process (DPP) proceedings in an effort to minimize fact discovery.
Why are these documents relevant?
The documents relate to internal discussions within the SEC about Ripple (XRP) and Ethereum (ETH) before the XRP lawsuit began.
Ripple also has called for disclosure of SEC employees’ digital asset holdings at the time of the lawsuit. Ripple attorneys claim this is relevant because of: remarks created by former SEC director William Hinman during a speech to the Yahoo! Finance All Markets Summit in 2018, in which Hinman seemingly viewed Ethereum as a non-securities asset.
Due to the controversial public admission, Ripple successfully defeated the SEC’s efforts to launch the so-called “Hinman deposition’.
The speech proved important to the XRP case and has pushed the SEC on the back foot with Hinman’s revelations that have led to two key points on which the entire case can rest:
1) Whether XRP should be considered a securities asset at all (if Ethereum isn’t, according to Hinman).
2) Whether the SEC has given reasonable notice of its decision to classify XRP as a securities asset.
Page 376 of the deposition translation reveals that when Hinman was SEC director, Hinman met with Ripple executives in 2020 focused on finding a way for XRP to comply with regulations. It was during these meetings that he first suggested that XRP was operating as an illegal asset.
This supports the Ripple team’s argument that they have not received reasonable notice of the exploitation of an illegal asset or the need for regulatory compliance.
Why are these documents important?
Despite the SEC’s continued efforts to claim protections from the deliberative lawsuits over the internal discussion documents, this is now the third time Netburn has attempted to assert Ripple’s fair use right of access, with the judge appearing convinced by XRPs. arguments for relevance.
The Ripple Team explained the documents would reveal potential failures in decision-making regarding digital assets, ultimately demonstrating that no reasonable notice period was provided to allow Ripple to bring XRP into compliance with securities regulations.
What happened on the teleconference?
The conference call was well attended by the crypto community in a show of support for digital asset rights and the Ripple team.
Initially, the discussion centered on whether or not Brad Garlinghouse (the CEO of Ripple Labs) could have known that XRP was a fairness asset in 2013, but Judge Netburn argued that it appeared that the CEO didn’t until the lawsuit in 2020.
Ripple attorney Matt Solomon then began his arguments against the SEC’s excessive use of DPP to stop reviewing internal documents.
The SEC attorney, Jorge Tenreiro, responded with a flare back to Garlinghouse – claiming the CEO could answer yes or no, but this was quickly shot down by an unamused Netburn based on subjectivity.
Tenreiro then accused that it would be highly damaging to open the door to internal documents related to the SEC’s discussion of digital assets, leaving the judge wondering what damage the SEC thought it could do.
When the SEC attorney descended into deep legal lingo, a clearly annoyed Netburn responded with her decision to review the documents in person on camera to determine whether the DPP argument held up in light of the documents’ high relevance to the case.
Judge Netburn then ended the call.
Ripple Labs CEO Brad Garlinghouse took to Twitter to discuss how the case had expanded from the classification of XRP securities to a larger case over digital asset law and fair use.
Many in the crypto community took to the platform to tweet support for the XRP team.
Others simply complained about the lingering legal saga.
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